Which Tax form

Started by GerryH • 26 replies • 2445 views

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GerryH (DE)
Posts: 43

Posted:

Ok, here's hopefully a quick question.

As mentioned previously I'm new to the board, our organization is a "maintenance corporation"/HOA, and is classified as a Not-for-Profit Corporation.

This community is new (less than 3 yrs) so I want to double check which form (1120-h?) should we be using and is this for non-profits?

Thanks
Gerry

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Gerry,

Unless you have some really complicated transactions to report, 1120-H will probably work. You can download a copy + instructions from the IRS site to make sure. It's a snap to complete; around 10 lines to fill in. As S/T of our self-managed HOA, and with little tax knowledge, I can knock it off in just a few minutes (having collected all our financial info in advance).

GerryH (DE)
Posts: 43

Posted:

Thanks JohnK3,

MaryA1 (Arizona)
Posts: 7,043

Posted:

Gerry,

John is correct in suggest the form 1120H, which is specific to HOAs. As a corp, the HOA can also elect to use the corporate tax form 1120. However, most HOAs use the 1120H.

With regard to preparation of the tax form, John and I have different opinions. While I agree with John that it may not be a complicated endeavor, I think the tax returns should be prepared by professionals, preferably a CPA. I worked as an accountant at a CPA firm for many years and prepared many, many corporate tax returns. Tax returns that were much more complicated that the normal HOA 1120H, I might add. However, when I was treasurer of a small HOA I insisted on hiring a CPA to prepare our tax returns. Frankly, as an unpaid volunter board member I didn't want the resp. nor did I think it should expected of me.

So now you have two points of view. I'm sure you'll do what you think best for your assn and yourself.

GerryH (DE)
Posts: 43

Posted:

Thanks MaryA1,

I have no plans on preparing myself, a few on the new board wanted to be sure that we complete the correct form for non-profits, and we don't get hit with a tax. As I mentioned we have a mgmt company, but people on the previous boards can't recall what was done.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Gerry,

Hire an independent, licensed CPA to prepare the tax returns and he will (or should!) know which form is most beneficial to your assn. Independent meaning not associated with your HOA or your mgmt co.

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Having received our final 2008 interest income figure yesterday, I earlier undertook the daunting task of completing 1120-H. Including composing a mailing envelope, franking, rubber stamping a return address, and filling out the form, total elapsed time was 4:40. Minutes.

I felt as if I should stick in my thumb, pull out a plum, and compliment myself!

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Quote:

Posted By JohnK3 on 01/01/2009 9:41 AM
Having received our final 2008 interest income figure yesterday, I earlier undertook the daunting task of completing 1120-H. Including composing a mailing envelope, franking, rubber stamping a return address, and filling out the form, total elapsed time was 4:40. Minutes.

I felt as if I should stick in my thumb, pull out a plum, and compliment myself!

John, I applaud you. Seriously. The 1120-H is not difficult at all. And it takes very little time if your books are in order. It ain't "rocket science" and you don't need a CPA. There is absolutely no need for a small community association (say, under 500 units) which has no significant income other than dues, interest and minor miscellaneous items to pay for a tax preparer, particularly a CPA. All you need to really do is keep your books up to date as you go along.

I think people are intimidated by it and have become too "soft" when it comes to dealing with tax returns. They think the are far more difficult than they actually are.

I hope the plum was tasty. And I hope there is enough left to share with others who have the good sense to complete the 1120-H themselves.

MaryA1 (Arizona)
Posts: 7,043

Posted:

John & George,

The decision of whether or not the treasurer of an assn should prepare the income tax returns has nothing to do with the complexity of the job. As I stated, IMO, it has to do with whether or not the treasurer should have the resp. of this task. I've prepared far more complicated corporate tax returns during my career as an accountant at a CPA firm; however, I didn't feel I wanted or needed the added resp. of preparing my assn's tax return. The fact that prep of the 1120H for many small assn's doesn't require the intellect of a "rocket-scientist" doesn't have anything to do with the decision of whether or not the treasurer should perform the task. The two of you can make light of the job but it's serious business to be resp. for the preparation of state and federal tax returns. I don't think "blanket statements" should enter into this decision. It's really up to the indivudual treasurer -- whether they want the resp. or not and it also depends upon the financial situation of the assn.

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Amount of dues collected? Check.
Amount of expenses paid? Check.
90% of expenses paid? Check.
Amount of interest income under/over the $100 specific deduction? Check.
Tax payable ($0)? Check.
Signed JohnK3, S/T? Check.

I accept full responsibility. And what a good boy am I!

And last Saturday me and 3 other HOs, despite the plethora of liability/injury/insurance possibilities, removed our fountain for the winter rather than shelling out $650 ($200 for travel for 2, $450 in labor for a gig that took we amatuers 25 minutes) to experts. We are guilty of foolishness, self-endangerment, conceit, threatening the welfare of the HOA and other crimes, just to save some money. Shame on us.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Quote:

Posted By JohnK3 on 01/02/2009 9:22 AM
Shame on us.

Indeed.

I'm very pleased to hear that no one was hurt or injured and no property was damaged.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Posted By JohnK3 on 01/02/2009 9:22 AM
Amount of dues collected? Check.
Amount of expenses paid? Check.
90% of expenses paid? Check.
Amount of interest income under/over the $100 specific deduction? Check.
Tax payable ($0)? Check.
Signed JohnK3, S/T? Check.

I accept full responsibility. And what a good boy am I!

John,

Just like Little Jack Horner! LOL

But, John, never did I say you shouldn't prepare the tax returns or that it was too difficult for a layperson to undertake. All I've said is that "my opinion" is that the treasurer shouldn't have to take on that added resp. I could very easily have prepared the tax return, just didn't want to! And that was my choice! If you have no qualms about taking on this added resp. that's fine, just as long as you are prepared to also take full resp if your return is ever audited.

Just out of curiosity, why did you sign the return? You cannot sign as the preparer because that means "paid preparer". Shouldn't your Pres. sign as an officer of the corp? Just curious.

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Quote:

Posted By MaryA1 on 01/02/2009 12:19 PM

You can call me Little John Horner. Never went by Jack; never liked it.

Audit? I ain't afraid of no stinkin' audit. I listed a total of four figures, all of which are accurate to the rounded $.

I signed the form 'cuz it said SIGN HERE, and under the line it says "Signature of officer", and next to that it asks for my title, which I listed as "S/T", and I did so under penalties of perjury. I am the responsibilator.

Now, there's a separate section below SIGN HERE called PAID PREPARER'S USE ONLY, asking for a signature and other stuff. Is that what's confusing you? But I left that blank due to the fact I wasn't paid to fill out the return. Make sense? Seemed right to me.

MaryA1 (Arizona)
Posts: 7,043

Posted:

John,

I just threw in the "audit" remark for fun. I'm sure you won't have that problem. Sounds like you did everything right. What a good boy you are, indeed. LOL

RogerB (Colorado)
Posts: 5,067

Posted:

Gerry, filing 1120-H is so simple and quick that we do it for no cost for the HOAs we manage. If you have no Board member willing to do it ask your management company. I would never consider hiring a CPA for such a simple job.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Roger,

As I explained earlier, "simple" has nothing to do with it. However, you and some others don't seem to get it, but of course you are entitled to your opinion. :-)

MicheleD (Kentucky)
Posts: 4,491

Posted:

For what it's worth, I totally "get it," Mary.

We have a CPA do ours every year. It's a very simple way to get a pseudo-audit, as well, since the CPA has to review all our financials in order to complete the forms.

We have a CPA do ours, too.

It's not expensive. Our board considers it part of our "insurance."

MaryA1 (Arizona)
Posts: 7,043

Posted:

Thx, Michele. It's probably just a "male thing". As you know, there's a LOT they don't get! LOL

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Quote:

Posted By MaryA1 on 01/04/2009 6:47 AM
Thx, Michele. It's probably just a "male thing". As you know, there's a LOT they don't get! LOL

Mary, Mary, Mary. As the Great Communicator said to Carter (or maybe it was Mondale), "Well, there you go again."

I did the 1120 to save our HOA some money. Not much, true, but with a runt operation like ours, $100 retained can be used elsewhere in our meager, humble budget on something we volunteers can't or won't tackle. As the late, great Senator Everett Dirkson (sp?) (R, IL) once opined re: the US Budget: "A billion dollars here, a billion dollars there, and pretty soon it starts to add up."

MaryA1 (Arizona)
Posts: 7,043

Posted:

John,

And that's why I said: "What a good boy you are, indeed." LOL I hope the members of your assn appreciate you and your endeavors. As the old adage says, a dollar saved is a dollar earned. I don't tend to think in "billions"!

My opinion never had anything to do with the difficulty of preparing the tax returns.

Moral to this thread: What you, as treasurer, feel comfortable in doing is all that matters. . .

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Mary,

As usual, you're a very good sport (and what a good girl you am), but this thread is getting more repetitive than the Three Dog Night version of "Eli's Coming," so maybe it's time to move on down the line. Don't forget to hide your heart!

MicheleD (Kentucky)
Posts: 4,491

Posted:

aahhhh......children of the 60s-70s. . . .

MaryA1 (Arizona)
Posts: 7,043

Posted:

John,

Agreed! Just had to get in the last word. LOL

RichardB35 (Missouri)
Posts: 5

Posted:

I think the choice of a professional to do your tax return depends on a number of things. It's a cost/benefit analysis for sure.

Most HOA's are going to qualify for using Form 1120-H. But automatically selecting that form may deprive the association of future benefits associated with Form 1120, even though the choice of returns is an annual decision.

HOA's are one of few taxpayers that do have a choice of returns and choosing one or the other without knowing the specific advantages/disadvantages of both is shortsighted IMO.

MarkM31 (Washington)
Posts: 494

Posted:

8 year old thread

RichardB35 (Missouri)
Posts: 5

Posted:

Hey, you were lookin' at it.

All facts are still the same.

RoseF (North Carolina)
Posts: 10

Posted:

I just read the whole thread too! As new Treasurer of HOA, got copies of 2014/2015 tax forms (1120H) we paid CPAs $540 and $380 for. I think that's waaay to much for a two-figure form. I think our property manager must be getting a cut - LOL.

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